Scholastic Invests in 9 Story Media Group

Scholastic (NASDAQ: SCHL) has announced a definitive agreement to invest in 9 Story Media Group, acquiring 100% of the economic interest in and a minority of voting rights in 9 Story for approximately USD $186 million. This investment is expected to close in Scholastic’s fiscal 2025 first quarter, beginning on June 1, 2024.

9 Story recorded revenue of approximately USD $104 million in its most recent fiscal year, ended August 31, 2023. The addition of 9 Story is anticipated to drive substantial improvements in top-line growth and bottom-line results through its existing content library, production studios, and global distribution and licensing capabilities.

Scholastic expects the investment to result in long-term earnings accretion and reduce the capital intensity of production. The company also plans to fund the transaction from its available cash and its revolving credit facility, while maintaining its regular dividend and authorized stock repurchase program.

The press release also highlights the strategic rationale behind the investment, emphasizing the potential to leverage Scholastic's trusted brand and best-selling publishing with 9 Story’s industry-leading capabilities. This collaboration aims to build deeper connections with young people through compelling stories across various platforms.

The investment is seen as a significant step in expanding Scholastic’s opportunities in the production and global licensing of its intellectual property, with a focus on engaging children with reading and creating global franchises. The transaction is expected to further enhance Scholastic's position as a top developer, producer, and distributor of kids and family content.

For more than 100 years, Scholastic Corporation has been the world’s largest publisher and distributor of children’s books, a leading provider of literacy curriculum, and a producer of educational and entertaining children’s media. Scholastic Entertainment, the company’s media division, has rapidly become an award-winning and highly profitable business, with recent announcements including the production of a second season of the live-action “Goosebumps” series for Disney+ and Hulu.

9 Story Media Group, on the other hand, is a leading creator, producer, and distributor of premium, kids, and family-focused content. Its award-winning animation studio, Brown Bag Films, has won 21 Emmy Awards and two Oscar nominations. The company’s international distribution arm represents more than 5,000 half-hours of animated and live-action programming, while its in-house consumer products division builds international entertainment brands for kids.

The press release does not explicitly provide a comparison with the previous period's metrics. Today the company's shares have moved -1.9% to a price of $37.49. For the full picture, make sure to review Scholastic's 8-K report.

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